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Credit Rating Agency

   Also found in: Dictionary/thesaurus, Legal, Encyclopedia, Wikipedia 0.01 sec.
Credit Rating Agency
A company that provides investors with assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. A high rating indicates low risk and may therefore encourage investors to buy a security. Additionally, banks may only invest in securities with a high rating from two or more credit rating agencies. The SEC recognizes 10 firms as credit rating agencies; Fitch, S&P, and Moody's are the three most prominent. However, the methods of credit ratings agencies have been subject to criticism. For example, most agencies gave high-risk mortgage-backed securities top ratings until they defaulted at the collapse of the housing bubble.


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When a credit rating agency is invited to rate takaful and retakaful insurance--which is happening with increasing regularity as their numbers grow--it has to consider the practical implications for its analysis of this Shariah-compliant concept of insurance.
In 2006, Congress passed the Credit Rating Agency Reform Act that provided the SEC with authority to impose registration, recordkeeping, and reporting rules on credit rating agencies registered as Nationally Recognised Statistical Rating Organisations (NRSRO).
Trevor is a senior sovereign analyst at the credit rating agency Standard and PoorAEs (S&P).
 
 
 
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